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U.S. partnerships may now send out Schedule K-1 to recipients electronically, according to new rules issued Monday by the IRS.
Schedule K-1 is used to report a beneficiary's share of income, deductions, credits and other items from pass-through entities, such as limited partnerships, S Corporations, income trusts and limited liability companies.
Partnerships must report this information annually to the IRS and provide a copy to their partners. The IRS said U.S. partnerships filed some 26 million K-1s in 2011.
The new guidance, Revenue Procedure 2012-17, sets out rules that describe when a partnership may provide K-1s to partners electronically instead of on paper.
A partner must give its consent before the partnership provides the K-1 electronically. It may do so electronically, including through secure email or on a partnership’s website. Partners must to be informed about changes in software, and instructed about accessing and printing electronic statements.
The IRS said K-1s generally must be provided to recipients by the due date of Form 1065, U.S. Return of Partnership Income. For partnerships operating on a calendar year, the due date this year is April 17.
By allowing electronic transmission of K-1s, the IRS hopes partnerships will find it easier to provide copies to their partners, and lower the expense associated with printing and mailing K-1s to partners who elect to receive them electronically.